CURRENT AFFAIRS

Description

NDA government has released bills related to agriculture and Lok Sabha (Lower House) has passed the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 as well as the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020.

The farmers’ mainly in Punjab and Haryana are protesting against the Bill, so hereby discussing the features of the Bill and why they are protesting?

Before moving the issue, let’s first understand the agricultural market scenario in India.

Minimum Support Price

·      The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).

·       The minimum support prices are a guarantee price for their produce from the Government.

·       The major objectives are to support the farmers from distress sales and to procure food grains for public distribution. In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, government agencies purchase the entire quantity offered by the farmers at the announced minimum price.

About APMC

·         Agricultural markets in India are mainly regulated by state Agriculture Produce Marketing Committee (APMC) laws.  

·         APMCs were set up with the objective of ensuring fair trade between buyers and sellers for effective price discovery of farmers’ produce.

·         APMCs can:

(i)                  regulate the trade of farmers’ produce by providing licenses to buyers, commission agents, and private markets,

(ii)                levy market fees or any other charges on such trade, and

(iii)              provide necessary infrastructure within their markets to facilitate the trade.

·         It forms the regulated mandis, where farmers will bring its produce for selling to private players and if not sold, then government will procure at Minimum Support Price. This acted as incentive for farmers to remain in agriculture.

Flaws in APMC

The Standing Committee on Agriculture (2018-19) observed that the APMC laws are not implemented in their true sense and need to be reformed urgently.  Issues identified by the Committee include:

(i)                  most APMCs have a limited number of traders operating, which leads to cartelization and reduces competition, and

(ii)                 undue deductions in the form of commission charges and market fees.

(iii)              Traders, commission agents, and other functionaries organise themselves into associations, which do not allow easy entry of new persons into market yards, stifling competition.

(iv)              The Acts are highly restrictive in promotion of multiple channels of marketing (such as more buyers, private markets, direct sale to businesses and retail consumers, and online transactions) and competition in the system.

During 2017-18, the central government had released the model APMC and contract farming Acts to allow restriction-free trade of farmers’ produce, promote competition through multiple marketing channels, and promote farming under pre-agreed contracts.

The Standing Committee (2018-19) noted that states have not implemented several of the reforms suggested in the model Acts. It recommended that the central government constitute a Committee of Agriculture Ministers of all states to arrive at a consensus and design a legal framework for agricultural marketing.  

Standing Committee recommendations            

The Standing Committee on Agriculture (2018-19) recommended that the central government should create marketing infrastructure in states which do not have APMC markets (i.e. Bihar, Kerala, Manipur, and certain union territories).

·         The Standing Committee on Agriculture (2018-19) noted that availability of a transparent, easily accessible, and efficient marketing platform is a pre-requisite to ensure remunerative prices for farmers. Most farmers lack access to government procurement facilities and APMC markets. It noted that small rural markets can emerge as a viable alternative for agricultural marketing if they are provided with adequate infrastructure facilities.

·         The Standing Committee also recommended that the Gramin Agricultural Markets scheme (which aims to improve infrastructure and civic facilities in 22,000 Gramin Haats across the country) should be made a fully funded central scheme and scaled to ensure presence of a Haat in each panchayat of the country.

Basic features of the Bills

What is Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020?

• Trade of farmers’ produce: It allows intra-state and inter-state trade of farmers’ produce outside: (i) the physical premises of market yards run by market committees formed under the state APMC Acts and (ii) other markets notified under the state APMC Acts.  Such trade can be conducted in an ‘outside trade area’, i.e., any place of production, collection, and aggregation of farmers’ produce including: (i) farm gates, (ii) factory premises, (iii) warehouses, (iv) silos, and (v) cold storages.

• Electronic trading: It permits the electronic trading of scheduled farmers’ produce (agricultural produce regulated under any state APMC Act) in the specified trade area.  An electronic trading and transaction platform may be set up to facilitate the direct and online buying and selling of such produce through electronic devices and internet.  The following entities may establish and operate such platforms: (i) companies, partnership firms, or registered societies, having permanent account number under the Income Tax Act, 1961 or any other document notified by the central government, and (ii) a farmer producer organisation or agricultural cooperative society.

• Market fee abolished: It prohibits state governments from levying any market fee, cess or levy on farmers, traders, and electronic trading platforms for trade of farmers’ produce conducted in an ‘outside trade area’.

What is Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020?

• Farming agreement: It provides for a farming agreement between a farmer and a buyer prior to the production or rearing of any farm produce.  The minimum period of an agreement will be one crop season, or one production cycle of livestock.  The maximum period is five years, unless the production cycle is more than five years.

• Pricing of farming produce: The price of farming produce should be mentioned in the agreement.  For prices subjected to variation, a guaranteed price for the produce and a clear reference for any additional amount above the guaranteed price must be specified in the agreement.  Further, the process of price determination must be mentioned in the agreement.

• Dispute Settlement: A farming agreement must provide for a conciliation board as well as a conciliation process for settlement of disputes.  The Board should have a fair and balanced representation of parties to the agreement.  At first, all disputes must be referred to the board for resolution.  If the dispute remains unresolved by the Board after thirty days, parties may approach the Sub-divisional Magistrate for resolution.  Parties will have a right to appeal to an Appellate Authority (presided by collector or additional collector) against decisions of the Magistrate.  Both the Magistrate and Appellate Authority will be required to dispose of a dispute within thirty days from the receipt of application.  The Magistrate or the Appellate Authority may impose certain penalties on the party contravening the agreement.  However, no action can be taken against the agricultural land of farmer for recovery of any dues

Proposed benefits as stated by the government

·         The farmer will get attracted towards comparatively good crops, and if the farmer produces costly crops his income will automatically increase and he will also support agriculture growth.

·         These Bills will also help in agriculture export.

·         These bills will not affect the Minimum Support Price (MSP)" and that these will help in making the farmers more advanced.

·         Through these reforms, farmers will connect directly with the big traders and exporters, bringing profit to agriculture.

·         The Agriculture Minister clarified that these bills do not affect the State APMC Act. "APMC will be in the state but there will be inter-state trade outside its periphery and the farmers will be able to sell their produce from their field, home and any place after the legislation comes into existence."

Key issues

1.      Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 states that sale and purchase of agriculture commodities outside of APMC mandis will be tax free. So farmers are protesting as it will make the market unregulated as outside mandis agricultural laws are not present.

2.      Further, this will slowly make the mandi concept redundant as most of the traders will buy outside mandis as it will be tax free, so slowly the security in form of MSP will abolish.

3.      This may lead to exploitation of farmers in the hand of corporates and will lead to corporatization of agriculture in India.

4.      Besides the farmers, the commission agents are also opposing these ordinances. They also fear that the new laws will bypass their business and they will be rendered jobless.

5.      Farmers avail finances from the commission agents to sow the crop and return it when the product reaches the market. As the banks are hesitant to lend money to the poor farmers, they solely depend on the private money lenders and the commission agents.it will become redundant.

6.      The farm unions have expressed the apprehension that by allowing the farming agreements, the big players and companies will capture the farming which will harm the small and marginal farmers. The private players will exploit the farmers by indulging in hoarding and other malpractices.

7.      States also earn substantial money from the various levies on the value of produce transacted in APMCs. Punjab’s annual revenues from mandi fees and a ‘rural development’ cess — which add up to 6% on paddy and wheat, 4% on basmati, and 2% on cotton and maize — are estimated at Rs 3,500-3,600 crore. All that would obviously get hit if trades were to move away from the mandis.